Sunday, 27 January 2013

Each year it costs
you more than it did last year, despite the fact that you have had no claims,
no speeding tickets and your “no claims discount” has risen. The only way to cut the cost is to change
insurer.

Bad luck – you have
an accident. Your car is damaged,
somebody else’s car is damaged and it is the other guy’s fault.

If you have
comprehensive cover, you will claim for the damage to your own vehicle on your
own policy and leave it to your insurers to get their money back from the other
side. If the car is a write off, then the insurers will pay you far less than
you think it is worth in monetary terms.
Sentiment – forget that.

If it is
repairable, the insurers will insist that you take it to one of their approved
dealers. These people may be “approved” because they pay the insurers for the
business and/or charge a discounted rate for the work they do.

They will be cheaper
than your preferred garage, first, because the insurer puts more business their
way and, secondly, because they will compromise on the repair. Where possible,
approved manufacturers parts will be replaced by cheaper alternatives and luxuries
like door safety bars can be dispensed with.

These approved
repairers will be directed by insurers to buy their paint and other parts from
specified suppliers. Those providers
then pay what is euphemistically called a “rebate” to insurers – millions of
pounds a year (See Above the law).

If you need a hire
car rather than a courtesy car, you will go to the company of insurers’ choice,
even if that is not convenient to you.
You will get what you are given.
Why? Because the insurers have hammered the rates down so that the hire
car companies need to look for savings wherever they can. They are probably also paying a “rebate” (See Business as usual).

Did I mention that
you were injured? Oh, well you will have had a call by now from
somebody who seems to know all about your business. How can that be?

The chances are
that you won’t have been told that insurers have passed your personal details
to a claims management company (“CMC”). They don’t make a big fuss about it because,
guess what, the insurers just pocketed hundreds of pounds by selling your
claim.

The CMC then adds
its margin and sells your claim to a “panel solicitor” who is prepared to pay
for it. Often the solicitor
may have at this stage an outlay of £800, and they haven’t started work
yet.The value of the claim may not be a
great deal more than that so how are they going to process it without running a
loss, let alone making any profit?

The answer is that
they give it to unqualified staff pushing buttons on software that does a very
ordinary job within set parameters. They
are not going to take risks like issuing proceedings and insurers on the other
side know that (see Peanuts).

The claim will
settle for less than it is truly worth so that nobody in the process needs to
waste more time working for the same reward of a pitiful fixed cost, most of which has already been eaten up by
the backhander that your own insurance company secretly trousered when selling
your claim.

In many cases the
referral elsewhere may have been entirely open because you bought from your
insurer when you took out the policy (though you might not have realised it)
what is called before the event
insurance (“BTE”) supposedly to cover you for the cost of claiming your
uninsured losses.

In many cases the
costs of the solicitors appointed by the insurers aren’t covered by the policy
at all. What happens is that the
preferred solicitors pay insurers a fee (surprise!) for the case and then they
run it on a conditional fee arrangement in exactly the same way as we or any
other independent would.

Technically,
insurers will say that they cover any adverse
costs i.e. the risk that the claim fails and the other side want their
legal bill paid. In reality this almost
never happens.

So, you might
wonder why you pay £20 or £30 when you take out the policy for this BTE cover? The answer is it’s to help pay the insurers’
administrative costs in making sure that they pick up another referral fee when
they email a copy of your claim form to their panel solicitor.

And that’s how it
works. The insurance company takes what
a large number of lawyers would consider to be bribes, according to the Bribery
Act 2010 from everybody involved (see Bribery - every step of the way).

Next year your
premium will rise again, just like executive salaries and shareholder returns.
Insurers will blame victims and lawyers for claiming compensation and the costs
incurred whilst claims managers argue black is white to put off the day when
they have to take out the cheque book.

This is why the Office
of Fair Trading has described the insurance industry as “dysfunctional”.

Thursday, 17 January 2013

Earlier this month we posted a news report of the Court of Appeal’s decision to direct an enquiry by the Criminal Cases Review Commission into the fairness of a criminal trial in light of revelations about social media links between a juror and the (convicted) defendant.

It had emerged that she and the
juror in questions shared 22 mutual ‘friends’ on Facebook. There were said to
be a number of other ‘small town links’ which at least gave an appearance of
bias. See Jury trial in the Facebook era.

It’s the social media element
which is of particular interest – to our senior judges and to the rest of us.
We’ve seemingly navigated the choppy waters of tweeting in or from court and
the obvious potential problems with that but do we now face a new dilemma?

There is no suggestion that the
two women in this case were friends – in the real or virtual sense – or even
acquaintances. The issue arises from the fact that they shared a number of
mutual Facebook connections.

Where the two of them were not
directly connected did either know that they shared these indirect links? No
reason why they should unless perhaps they had trawled Find Friends for suggestions that would of course be based to a
large extent on numbers of mutual acquaintances.

It’ll be noticeable that my
terminology changes, as it does between social media platforms. On LinkedIn we
have connections. On Twitter we
follow and are followed.

“Friend” happens to be the
Facebook handle. What does it mean to you? How does it compare with the
definition of those with whom you choose to meet “in real life” and talk to
socially on a regular basis?

I have friends, who are also
“friends”, with many hundreds of Facebook friends. Often one wonders if they
mean any more than a comrade in battle during the course of a Massive
Multi-Media Role Playing Game.

What’s clear already is that
being a friend of someone on Facebook is not necessarily an indication of
affinity, though the two may co-exist. Being a friend of a friend of a friend
may mean nothing.

Would knowledge of the tenuous
link change that? Do those of us on LinkedIn draw any conclusions about any
aspect of a person unknown to us from the company they keep, or the company
their company keeps? Possibly.

If any such influences seem
possible then it must follow that perceptions of potential influences are
likely and the CCRC will surely conclude that guidance is needed. Perhaps that
will mean that our courts again have to catch up – learn how to scrape the data that is freely available
or have the means to access for these purposes. Another human rights issue.

Thursday, 10 January 2013

Channel 4’s Dispatches
report on Monday evening may have opened a few more eyes to the grubby antics
of the insurance industry. There is a danger also that many have come to the
conclusion it’s just how they operate and as long as there is still an affordable
premium available, that’s all that matters.

The problem is far deeper than that.

Harry Wallop’s report highlighted in particular two practices which
many people might reasonably call “scams”.

Many of us have had the experience of getting the car repaired after a
collision. Often, particularly in crisis
period, we prefer to give the business to somebody we know and trust, who might
well be the appointed dealer for our car’s manufacturer.

That’s fine because (probably) when we were sold the policy it was on
the basis amongst other things that we could choose our repairer etc. In
reality it doesn’t happen because insurance companies insist that the vehicle
goes to one of their “approved” specialists.

Is this because, like panel lawyers (see Panel beater) they are better
than everybody else? No, it is because
they do what they are told by their paymasters.

As the Dispatches programme
revealed with first-hand evidence from people in the industry, that may go as
far as compromising on safety features and using non-manufacturer approved
parts to save money.

Beyond that, insurers are making money by insisting that their pet
panel beaters purchase parts, including paint, from specified suppliers and
nobody else.

The reason is that insurers then receive from the paint suppliers what
is benignly described as a “rebate”.

Take a look at the definitions within the Bribery Act 2010. The key provisions are summarised in my blog Bribery - every step of the way.. How can anybody
say that the system of rebates is not plain and simply a practice of paying and
receiving bribes?

The other charming practice that was covered, again with the
assistance of direct evidence from people in the industry, was that of
inflating repair charges within “no fault claims”.

It’s simple enough. In most
accident claims, one or other driver will be responsible. One is “at fault” and the other isn’t. The
insurers of the “at fault” driver are going to be paying for the repairs, but
the repairs are organised by the innocent driver’s insurance company. That insurer pays the repair bill and then,
you would expect, claims back the cost from the “at fault” insurer.

No, they claim back the cost and
more. In other words, they add a
margin to their actual outlay and make a profit. It’s estimated to manufacture
£225 million a year (adding to the cost of your premium).

One such disputed claim was dismissed and harshly criticised by a county
court judge in 2011. It grabbed the
attention of the Office of Fair Trading, leading to the observation that the
industry was “dysfunctional” and a reference to the Competition Commission,
which is ongoing (see Business as usual).

The insurers who were on the wrong end of that decision in 2011
appealed to a High Court judge and succeeded.
It is thought that there is going to be a further appeal, but it is also
said that since then more insurers are looking to formalise these arrangements
which the High Court appears to have sanctioned.

The decision seems bizarre to many people including lawyers I
know. It looks to most of the world like
an inflated claim.

Ironic that insurers are apparently feeding off each other with these
inflated claims whilst at the same time now routinely and vigorously pursuing
jail terms for accident victims who are said to have exaggerated their claims against insurance
companies.

One rule for one and one rule for another?

These organizations already operate above the law. With the present assault on the civil justice
system they are now aiming - and seemingly succeeding with the assistance of
our impoverished and supine government – to raise themselves up above the
clouds.

Monday, 7 January 2013

As the Government plans yet more
measures to elbow lawyers out of litigation, how is the Court Service shaping
up to deal with a tsunami of inexperienced and anxious users?

Last week, we sent a chasing letter
to a county court to be met with the following message – (which wasn’t tailored
to the festive season, incidentally):-

“This email box is accessed daily.
In accordance with HMCS policy, your email will be dealt with or
responded to within ten working days following the date of receipt.”

That translates to as many as 16 calendar
days during most of the year and probably three or four weeks at the turn.

The purpose of the letter was to
enquire why we still haven’t had any response to a request for default judgment
that was filed three weeks ago.

Yes, I know about Christmas, but this
should have been dealt with more than a week before. Sadly, the experience of
this particular court as well as others – is that dealing with routine matters
inside a fortnight is considered a noble aspiration.

I distinguish routine matters because
if it’s more than mechanical, you just know that it will take far longer than
this with the explanation (sorry, expectation that you will work it out for
yourself) that it was more complicated than the norm.

Routine communications needn’t take a
fortnight or more to process. There
shouldn’t be any acceptance in this industry that it may take that long.

The Court Service has done this for
years. I remember the prolonged cris-de-coeur from another local court
years ago to the effect that they were three weeks behind and we should bear
with them. It became their service standard for years.

Similarly, my first firm used to have
a much admired associate or legal executive whose reputational headline was
that he had a permanent typing backlog of three weeks. People thought that was
impressive.

Quite a few lawyers have woken up
now. Insurers haven’t because they don’t
want to. Delays mean that you hang on to
money and earn interest for longer.

The Court Service still doesn’t get
it. Our chums in Salford seem to have
settled down into a routine 10 day “backlog” with the expectation that the
entire civil litigation world will come to see that as the benchmark. This is
without complications such as those I wrote about in To me,to you

As I observed to that local court
manager years ago, if it is possible to work consistently x days or weeks
behind schedule then you ship in extra resource for x days or weeks, get back
up to speed and stay on the pace.

The likelihood is that will never
happen because there is an ingrained, deep-rooted philosophy that these turnaround
times are acceptable. So, if they ever get these services up to speed, the
majority (not all) within the system will coast until their backsides are once
again on fire and they are falling short.

There’s a New Year resolution for you
HM Court Service – excepting, excusing and acknowledging the minority of
conscientious stars - buck it up!